Global warming study forecasts economic chill

Date: 25/04/02

By Laurence Frost

COMPLYING with the Kyoto Protocol on global warming will cost Europe millions of jobs and knock several percentage points off economic output, an influential US think-tank has warned.

Cutting greenhouse gas emissions to 8 below 1990 levels over the next eight years would cost 3.8-5.2 in GDP in the four countries studied by the American Council for Capital Formation (ACCF).

The Washington-based charitable foundation carried out the research with the help of Germany's Rhine-Westphalia Institute for Economic Research and environmental consulting firm DRI-WEFA.

Its findings, released this week, contradict the far more optimistic forecasts published by the European Commission, which suggest Kyoto could cost as little as 0.06 of EU output, or €3.7 billion.

EU environment officials dismissed the ACCF figures, which they suggested could have resulted from over-simplistic assumptions about the distribution of emissions cuts among sectors, and the role of emissions trading in bringing down costs.

'Our view is that the cost of Kyoto is going to be low, and it's going to be very low if we adopt the most cost-effective policies,' said one official.

He said the ACCF's research priorities reflected the financial backing it received from oil and gas companies including ExxonMobil, as well as last year's US decision to abandon Kyoto.

If the ACCF calculations prove accurate, however, climate change measures will have a major chilling effect on the EU economy, affecting a wide range of industries, reducing both living standards and governments' spending power.

'Every year they will have less to spend than they would have had otherwise,' said Dr Margo Thorning, chief economist for the foundation. 'Kyoto will clearly make it more difficult to do other things like provide better healthcare services, or pension provision for the growing retired population.'

The report paints a grim picture of the damage done by the price increases needed to reduce fossil fuel consumption.

Heating oil will go up by around 40 and petrol by 10-20, it states, while natural gas prices will more than double in two of the four countries, Britain and the Netherlands. Germany will lose 1.8 million jobs, Spain and the UK a million each and the Netherlands 240,000.

Thorning defended the quality of the research, emphasising that the non-profit foundation was 'very broadly funded' with contributions from around 350 companies, individuals and institutions.

The report's release coincided with a visit to Washington by EU environment chief Margot Wallström, who on Tuesday (23 April) met US environment officials to push for tougher climate change measures from the Bush administration.

'It's important that we work together with the US, even if we disagree on some specific issues,' the Swedish commissioner said.

Report of a study carried out by the American Council for Capital Formation (ACCF) on the effects in Europe of complying with the Kyoto Protocol on global warming.

http://www.accf.org/ http://www.accf.org/

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